It is reported that GE plans to announce the spin-off decision as early as this spring, and it is more likely that the $20 billion assets will face the spin-off. Blocked development of the diversified business sector, weak share price performance and adjustments by the executive team are considered to accelerate the spin-off process. The reporter asked GE whether it would be split in this spring. As of press time, the company did not reply.
In the past 2017, the US stock market performed well, but GE underperformed the broader market. The stock has fallen 40% in the past 12 months, while the S&P 500 has risen 22.5%. GE is already the worst performer in the Dow Jones index in 2017. In addition, it has lower performance than its competitors such as Honeywell, ABB and Siemens. With the continuous layoffs in 2017, GE has become the US company that announced the most layoffs.
The reporter found that the troubled manufacturer announced 19,242 job cuts last year, including 12,000 job cuts announced on December 7, 2017. In the latest layoff, GE Power's director, Russell Stokes, said: "This is a painful decision, but it is necessary; the downturn in the power generation market leads to products and services. Sales have dropped significantly, and GE Power needs to respond."
GE's new CEO, John Flannery, seems to imply that he is prepared to make major changes to the company.
Flannery once said that 2018 will be a "replacement year." He stressed that to transform GE into a small and sophisticated company, the restructured GE will focus on only three core businesses: power, aerospace and medical equipment, while withdrawing from smaller businesses. Unlike most industry giants' relatively stable business strategy, Flannery's predecessor, Immelt, pursues a more radical strategy to transform GE into a future with nearly $600 billion in capital. The industrial prototype of an industrial company that embraces the Internet. But now it seems that this strategy is facing uncertainty in the ongoing spin-off of GE.
According to the transformation plan announced last year, GE will divest at least $20 billion in assets through sales and spin-offs. These business segments include transportation, industrial solutions, current and lighting, and several small and medium business segments. The reporter asked GE about how this would affect the business sector in the Chinese market. As of press time, no response has been received from GE. However, the reporter noted that the R&D center created by Chen Xiangli, the former vice president of the world, has been closed.
In fact, cutting $20 billion in business, for the industrial giant with annual revenues of around $126 billion, means self-reduction of around 17%. Flannery pointed out that GE will "smartly" abandon some of its businesses, retaining only growth-oriented, market-leading, and market-leading sectors. Prior to this, GE has begun to take action to divest related assets. In September 2017, Swiss industrial giant ABB announced that it will acquire GE Industrial SoluTIons, GE's global industrial solutions business, for $2.6 billion, which will be integrated into ABB's ElectrorificaTIon Products division.
However, a few days ago GE senior vice president, China's president Duan Xiaoyu once told reporters, "In the internal operation process of GE, mergers and acquisitions and divestitures are things that GE has to do every quarter. So mergers and acquisitions, for GE internals It is very normal."
In addition to the business spin-off, the reporter noted that on January 16th, US local time, GE Capital, a financial services division of GE, said it had reassessed its insurance business and plans to accrue $6.2 billion in the fourth quarter.
GE Capital also said in a statement that it expects to pay about $15 billion in statutory surplus reserves over the next seven years. It is expected to be $3 billion in the first quarter of this year and $2 billion in each year between 2019 and 2024. To this end, the company will suspend the payment of dividends to the parent company in the foreseeable future. US industry analyst Wendy ZHU told reporters that this will strengthen the market's perception that GE is facing serious challenges. After the above news came out, General Electric's share price fell more than 4% to US$17.96 before the US stock market opened on Tuesday.
At present, it seems that GE, which is struggling in the integration and integration of business segments, still has a difficult time to spend. However, the industrial Internet genes injected by former CEO Immelt for GE may become an important means for GE's future renaissance. Duan Xiaoyu has told reporters more than once that the industrial Internet genes injected by former Immelt for GE may not undergo major adjustments, and this is widely regarded in the industry as one of the important weights for GE to be born again.
However, as the first to propose the concept of industrial Internet, GE is not at ease. ABB, which recently acquired GE's global industrial solutions business for $2.6 billion, released ABB's AbilityTM digital solutions and platform in June last year. ABB China Chief Technology Officer Liu Qiang told reporters that since 2014, ABB Group has begun digital transformation.
Gu Chunyuan, President of ABB Group Asia, Middle East and Africa, told reporters: "ABB will help enterprises fully realize automation through leading robotics and customized automation solutions, and provide digital integration of IoT, industrial big data and industry experience. The solution takes productivity and innovation to new heights and works together to create an efficient and connected future smart factory."
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